A global company is one that operates in two or more countries around the world. Often, this term is used describe companies that operate in multiple countries across continental borders. A global company is the opposite of a domestic business, which operates in only one country.
Global Business Motives
Global companies are also known as multinational corporations, or MNCs. A company extends beyond its domestic borders to become global to gain greater access to a broader customer base and revenue streams. Additional specific motives may include:
- Gaining traction in less competitive marketplaces
- Gaining access to talent and resources not available in the home country
- Acquiring new capital sources for use in expanding the business
- Diversifying the risks present in operating in just one country
- Seizing open market opportunities that align with core business competencies
Global Business Challenges
Operating a global company involves many more challenges than operating a typical domestic company. Higher costs in distribution, transportation, advertising, travel and supply acquisition are common. Beyond that, global companies must establish a strong network of partners and suppliers across the countries in which they operate.
Other challenges are present in particular business functions, including:
- Human resources: Creating a unified work culture when you have employees from many countries and cultural backgrounds is difficult. Global businesses often try to identify a few shared, core values to emphasize.
- Marketing: The first key in global marketing is to choose between a global or international strategy. A global strategy means your approach is basically the same in all countries. An international approach means you customize your brand or communication in different countries. Regardless of the strategy, significant time and investment are needed to research the needs, preferences and values of customers in multiple countries.
- Finance and accounting: Finance and accounting practices and ethical standards vary across the world. Maintaining a consistent approach is important. Companies must also consider the impact of currency rate fluctuation, which may cause higher or lower profit results when bringing foreign revenue back to the home country.
Partnerships or alliances with local businesses are one strategy businesses use to mitigate the risks of entering a foreign market.